Paying for a Doctors Visit in the Age of Medical Consumerism

Employers hoping to get patients to act like consumers first need to make it easy for them to pay for medical care.

For all the effort in recent years to make patients act more like consumers, people are still unable to buy health care the way they might buy a television. The reasons are many: Health care prices vary depending on where you live and who your insurance company is; doctors can tell you how much they charge, but they can’t necessarily tell you how much you owe (unless you are paying a simple co-pay); and even if you know how much you owe, paying it becomes a hurdle if you don’t have enough cash in a health savings account to do so. While most people are willing to go into debt to finance a car, few believe they should do so to fix a broken arm.

Some technology companies, however, are addressing the difficulties consumers face paying for health care.

Until the beginning of the year, American Express had one of the most sophisticated means of helping consumers pay for health care, experts say. Until the company launched a credit card tied to health savings accounts, a consumer would have to wait to pay a doctor and then, if the patient expected to get money back, wait for reimbursement from the health insurance company. This would often take weeks, by which time a payment with a credit card could already be accruing interest.

American Express solved this problem. Consumers simply paid for a visit by swiping their health care American Express card. The doctor would be paid, and the consumer would have the portion he or she owed deducted after the claim was adjudicated.

"It allowed for real-time payment by payer," says Mark Keck, a former a vice president for new-product development at American Express who worked on the card. Keck is now an executive vice president with Norwalk, Connecticut-based health care technology company TriHealix.

Not long after it was deployed, however, American Express canceled the project.

"We were launched and up and running and had tremendous uptake from payers," Keck says. But the company, foreseeing an economic downturn, Keck says, pulled back to its core business.

Keck, though, is hoping to pick up some of the pieces dropped by American Express. Since joining TriHealix, he has helped develop several technologies he believes bridge the gap between the health care and the financial worlds.

One TriHealix product helps doctors estimate how much an individual owes at the point of service. Keck says it’s accurate to the penny 85 percent of the time.

But, Keck says, "Relying on doctors to have technology at any time can be a challenge." That was one problem faced by American Express card holders: Not all doctors accept the card.

Another TriHealix product is intended to free consumers from having to pay a medical provider at the point of service. Instead, a person’s health savings account is deducted automatically when a health insurer processes a claim from a health care provider. Once a claim is deemed legitimate, the money is automatically pulled from any kind of health care account a person might have, including health savings accounts, health reimbursement arrangements and flexible spending accounts.

Another payment solution, developed by Foster City, California-based WiredBenefits, is a prepaid debit card that can only be used for health care purchases. It is designed to make it easier for employers to administer two kinds of health care benefits: limited medical plans and HRAs.

The cards can be an easy way for employers and workers to use limited medical plans, which do not provide catastrophic coverage but give employees the ability to see a doctor several times a year, buy basic prescriptions or make an emergency room visit. The debit card can also be used with HRAs—accounts funded and owned by employers but used by employees to buy health care. The idea is to make it inexpensive for small employers to offer some medical benefits with little administrative hassle. The employer does not have to administer the money or pay someone else to administer it.

"All the claims can be adjudicated through the card, so there’s no paperwork," CEO Charlie Marshall says. "It takes the place of a lot of HRAs that are administered online."

The card works with any retailer or doctor’s office that accepts MasterCard or Visa, Marshall says. The card can determine how much an individual owes for prescription drugs or a doctor’s visit, based on the plan design that connects to the card. And if an employee leaves the company, the card can be switched off. The balance is credited to the employer.

While WiredBenefits offers an easy way for employers to provide health care debit cards, E-Duction offers credit, addressing one of the more controversial issues that has arisen in the new world of health care consumerism.

Since 2002, the Blue Bell, Pennsylvania-based company has offered various forms of cards that extend lines of credit. The card lends individuals the equivalent of up to 2.5 percent of a person’s salary for people making less than $75,000, and 4 percent of base salary for those who make more. Charges to the card, which comes with a $48 annual fee, are automatically deducted from an employee’s paycheck and are designed to recover the loan within six months, interest-free.

E-Duction president and CEO Paul Chicos says the card is risk-free for the employer and helps people avoid piles of debt from medical costs. He says those who need the card are less likely to have other means of getting low-interest money. Some 85 percent of the company’s 20,000 card holders have subprime credit scores, Chicos says.

E-Duction is developing another product with Minneapolis-based U.S. Bancorp to give consumers credit if they overdraw on their health savings account. But, Chicos says, interest will be assessed on outstanding balances.

Some employers worry that switching to plans with high deductibles will force employees to go into debt to pay for health care costs, says Jay Savan, senior consultant at Towers Perrin in St. Louis. Most companies, though, do not believe they should provide credit products to their employees, even if the products are tied to payroll deductions.

Edward Jones, the St. Louis-based financial investment firm, is an exception. The company provides advances to employees from their paychecks to help cover medical bills.

Beginning in 2006, the company devised a way to help employees pay for unexpected medical bills by advancing them cash interest-free through future paychecks. The money, which otherwise would have been deducted from employees’ paychecks over the course of the year and deposited into individual HSAs, takes out the unpredictability associated with unexpected health care expenses. The service helped calm employees’ fears over not being able to pay for the high deductible, which is $2,500 for individuals and $5,000 for families in the most popular high-deductible plan the company offers.

"The No. 1 concern we heard from our associates was, ‘I don’t have $2,500 January 1st if I’m hit by a bus,’ " says Andy Greenberg, principal of HR programs at Edward Jones. "They were worried by that. This takes the worry out of having an unpredictable health care event."

Observers say the future of these technological developments will depend in large part on how HSA regulations are developed in the next administration. It is a future that is far from certain, John Casillas, executive director of the Medical Banking Project in Franklin, Tennessee, wrote in an e-mail.

"One must be mindful," he writes, "that an election with competing health care agendas could find road bumps in the ‘ownership society’ agenda."

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